Services sector activity in France grew in April for the first time in nearly a year, thanks to an improvement in demand conditions following a spell of high inflation, according to the findings from a monthly business survey.

The HCOB final purchasing managers index (PMI) for the French services sector, compiled by S&P Global, edged up to 51.3 points last month compared to 48.3 in March, exceeding a previous flash estimate of 50.5, Reuters reports.

A reading above the 50 level indicates growth in activity, which was last recorded in May last year.

“Improving financing terms, including lower borrowing costs and stronger customer demand were the main reasons reported for better business activity across the services sector,” said Norman Liebke, an economist at Hamburg Commercial Bank.  

“Domestic demand rises, and foreign demand falls. The strong uptick in business activity was led by stronger demand – the HCOB PMIs are showing that the demand was only stronger domestically and weaker from abroad. Demand was so strong that outstanding business increased for the first time since July last year,” he went on to add.

Furthermore, the employment sub-index increased to 53.2 from 51.5 the month before, indicating ongoing optimism.

In March, the final composite PMI, which includes both the services and manufacturing sectors, stood at 50.5. Growth was exclusively driven by the service sector, while industrial output, deeply stuck in a recession, experienced another challenging month, the Reuters report adds.

“Service providers are optimistic. Although the corresponding HCOB PMI for future output expectations moved down a bit, the betterment of the employment sub-index speaks for itself. Rising employment typically signals increased optimism among businesses,” Liebke added.